SM Energy expects 25% production jump this quarter thanks to Uinta purchase
SM Energy Co., Denver, will grow its total production by 25% this quarter thanks to the acquisition of Uinta basin assets on more than 63,000 net acres, executives said Oct. 31.
SM wrapped up its $2.1 billion purchase of 80% of XCL Resources LLC on Oct. 1. President and chief executive officer Herb Vogel said teams are running scenarios to see just how much of the company’s capital the Utah region can claim next year and beyond (OGJ Online, June 28, 2024).
Production, operations
SM executives expect to have assumed all operational activity from XCL by yearend. In the meantime, the operator is running three rigs and one frac crew in the area, Vogel said.
The operator produced 170,000 boe/d (net) (46% oil). Chief financial officer Wade Pursell said production will climb this quarter to 205,000-220,000 boe/d, with the oil mix climbing to about 51% because production from SM’s new Uinta operations is expected to be about 87% oil.
Across its three operating areas—in addition to the Uinta, SM also controls about 111,000 net acres in the Midland basin and 155,000 net acres in South Texas—the SM team plans to drill roughly 40 net wells and complete about 36 net wells this quarter. To fund those plans, Vogel and Pursell expect capital spending for the current quarter to be $320-340 million. Vogel said that spending pace shouldn’t be extrapolated into 2025 because SM’s Utah plans haven’t yet been completed.
“We are invigorated by the opportunity to unlock value in an overlooked basin and we expect to deliver results attributable to the crude profile, high margins and substantial scale that the Uinta basin acquisitions provide,” Vogel said in a statement. “We will diligently work to develop a 2025-2027 operating plan that will optimize capital efficiency and demonstrate the value of our expanded portfolio.”
SM posted a third-quarter profit of nearly $241 million on total revenues of $644 million. Those numbers were up 8% and 0.4%, respectively, from the same period in 2023, and were helped by a large gain on derivatives this year. The operator's realized price/boe slipped to $41.08 during the quarter from $45.24 a year ago.
Shares of SM (Ticker: SM) were off about 4% in midday trading Nov. 1 to roughly $40.20. They have lost about 15% of their value over the past 6 months, which has cut the company’s market capitalization to about $4.6 billion.
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.
